Investing an Annual Amount of $7,000 in These Three Artificial Intelligence Stocks a Year Ago Would Have Resulted in a Portfolio Valued Over $120,000 by 2024's Close
In recent years, numerous artificial intelligence (AI) stocks have skyrocketed, offering remarkable returns to investors. Even if you missed the initial wave, you could've still reaped substantial benefits by investing in some top-notch AI stocks last year.
For example, Palantir Technologies (PLTR, 1.06%), SoundHound AI (SOUN, -28.10%), and Nvidia (NVDA, 2.63%) demonstrated impressive performances in 2024. Investing $7,000 in each stock at the beginning of the year would have netted you a portfolio valued over $120,000 by year-end, with a near five-fold increase in pre-tax wealth. Let's delve into how these stocks performed and whether it's still worth investing today.
Palantir Technologies
Data analytics specialist Palantir Technologies has been leveraging AI to improve its offerings. Renowned for its work in counterterrorism and intelligence, Palantir boasts an impressive clientele of international governments. Its growth on the commercial side has been equally impressive, providing solutions to help businesses make informed decisions.
CEO Alex Karp described the demand for Palantir's AI Platform (AIP) as "unrelenting," with sales continuing to accelerate. Though Palantir's growth rate had been slowing, the trend reversed in 2024. Now as a S&P 500 component, Palantir enjoys investor confidence. An investment of $7,000 in the company a year ago would be worth over $33,000 by the end of 2024.
However, buying or holding Palantir now may be risky as its current valuation is astronomical – approximately 118 times next year's expected profits. Unless you're extremely bullish about the stock, you might want to consider selling, as a correction is a distinct possibility in 2025.
SoundHound AI
Voice AI specialist SoundHound AI is the smallest company on this list, with a market cap of around $5.5 billion. Late in 2024, its stock price soared after the company posted stellar quarterly results and secured deals with various eateries. The company announced that Torchy's Tacos – a popular regional taco chain – had rolled out its AI Smart Ordering service at all 130 locations, while also signing up Church's Texas Chicken for AI use in drive-thrus.
Despite its early days of growth and intense competition, SoundHound achieved 89% revenue growth in Q3 2024, and its losses narrowed by 8% to $21.8 million. The stock's rally near the end of 2024 transformed a $7,000 investment into nearly $70,000 by year-end.
However, SoundHound's high valuation – trading at 68 times its trailing-12-month revenue – could prevent it from repeating its performance in 2025. Its shares saw a volatile start to the new year, but it's too early to predict its trajectory.
Nvidia
Chipmaker Nvidia has been providing the processing power for numerous AI initiatives, thanks to its advanced graphics processing units (GPUs). With a market cap of over $3 trillion, Nvidia is one of the most valuable companies worldwide. The company enjoyed double-digit growth in top line and bottom line profitability during the first three quarters of 2024.
Nvidia's stock has shown resilience, even amidst market volatility. Its shares returned 1.01% by February 14, 2025. Despite the market's challenges, Nvidia continues to dominate the AI GPU market and deliver groundbreaking solutions.
Based on current market conditions, Nvidia appears to be the most reasonably valued investment, with a lower P/E ratio and PEG ratio than its peers. An investment of $7,000 in Nvidia's stock a year ago would have resulted in a portfolio worth over $19,000, representing a moderate but consistent return.
Investing in AI stocks can be a rewarding venture, but it's important to consider the risks and potential returns before diving in.
- Palantir Technologies' CEO Alex Karp mentioned the demand for their AI Platform (AIP) as "unrelenting," indicating that finance and money are being invested in the company's advanced technology.
- The impressive growth of Palantir Technologies in 2024 led to a significant increase in its stock value, transforming an initial investment of $7,000 into over $33,000, showcasing the potential returns of investing in AI stocks like Palantir.
- SoundHound AI, a voice AI specialist, saw its stock price surge in 2024 after impressive quarterly results and deals with major companies, demonstrating the potential of AI investments.
- Despite the high valuation of SoundHound AI, which is trading at 68 times its trailing-12-month revenue, investing $7,000 in the company a year ago could have resulted in a substantial return, near $70,000, illustrating the potential rewards of AI investing.
